The right selection of background music in your store can make the difference between keeping your customers comfortable and engaged or restless and bored.
But playing that music isn’t a simple case of loading the perfect playlist. Many store owners wonder if they can play Spotify, iTunes, YouTube, or other music services on their premises, and the answer is complicated.
Can I Play Licensed Music In My Business?
The immediate answer to this question is “no.”
Even if you have a Spotify premium account, even if the MP3s on your music player were legally bought (off Amazon, Google Play, or through another provider), or even if you have a CD player and are playing songs off your own collection, playing them in your place of business is illegal.
The reason behind this being illegal is that when licensed music is played in a commercial space, it is played with the intention of creating an experience for customers that is conducive to the interests of the business (getting customers to pay money for the goods and services on offer). The business gains from the music being played. For that reason, the law says that the creators of the music should get a piece of the profit being made.
The reality is that almost all the music you might want to play in your business is owned by someone. The songwriters, performers, and record labels have a copyright claim to the music, which determines when and how – and by whom – that music can be played. Copyright law also stipulates that when the music is played in certain spaces, the copyright holders must be compensated. This supersedes legal purchase of the song (either in a digital or CD copy), so simply having the album, buying it off Amazon or streaming it through Spotify, is not enough.
The Business of Playing Music Publicly
An alternative to violating these terms is Spotify’s Business account. As a commercial license subscription, it gives users the legal coverage to stream and download music through the Spotify platform, and to play it to anyone within the business’s premises. This is one way that Spotify itself makes money. While over 100 million people use the free version of the platform, the company receives payment from just 30 million people to unlock additional features. As a result, the company has been bleeding money because of how expensive its licensing agreements with record labels are, and collecting monthly fees from businesses helps to offset the exorbitant deals it has with the publishers of some of the biggest artists in the world.
Having a business account ensures that anybody who has a copyright claim to the music – the artists, the record label, or both – is fairly compensated every time their music is used in a professional setting. Other music streaming services, like Pandora, have their own business arrangement, and it works in much the same way. Users with a business account pay a monthly flat fee to access and play songs, safe in the knowledge that the respective services have arrangements with the necessary performing rights organizations that disburse royalties to labels. Through the use of a business license, there will never be any accusation that a store is unlawfully playing licensed music.
The Role of PROs
Performing rights organizations are groups like the American Society of Composers, Authors and Publishers, SESAC (originally the Society of European Stage Authors and Composers), and Broadcast Music, Inc. These organizations represent the rights of songwriters and music publishers to publicly perform the copyrighted works they created. This means that only people with the necessary copyright can play or perform those songs in public; everyone else has to purchase a license to do so. Big distribution platforms like Spotify have their own arrangements with PROs, which simplifies things for business owners who want to stream music in their stores. Just having a Spotify Business account grants you access to the repertoire of songs covered by the respective PROs.
Specifically, U.S. copyright law states that music can be considered to be “publicly performed” when the music is played in a location that is either open to the public or a location where “a substantial number of persons outside of a normal circle of a family and its social acquaintances is gathered.”
The Terms of Using Licensed Music
By these terms, music that is played in a business has to be done so with the appropriate license. Even if the business owner legally bought the music being played, the setting determines the intent. You are unlikely to argue that playing a Spotify playlist to people you do not know, in your place of work, constitutes personal use.
Additionally, legally purchasing the music being played is not legally owning that music. As The Guardian explains, a consumer simply buys the right to play the particular song per the terms set by the copyright holder; for individual consumers, those terms are almost exclusively for the song or album to be played in a private (or, at least, a nonpublic) setting. Attempting to use that same song in a public setting is a violation of the terms of purchase, akin to using a rental car as a personal vehicle.
The public performance clause in the copyright law includes, but isn’t limited to, streaming music from digital sources, playing MP3 files from a music player, CDs, music videos on TV, and music played by a DJ.
Location within the business is key. A business owner could have their personal Spotify or Pandora account playing music in a breakroom, away from the public, and the case could be made that this use of music is not meant for customers, and thus has no impact on the business’s financials. However, playing music in a space where customers can hear the music will likely open the business up to scrutiny.
Such is the risk for unlawfully playing streaming music in a business environment that the Richmond Times-Dispatch advises that unless owners have purchased a Pandora business account, they shouldn’t even open Pandora at their stores.
From Pandora’s perspective, they see the allure in allowing a business owner access to the wealth of copyrighted songs. DMX, the marketing firm that partnered with Pandora to bring streaming music to stores, told Rolling Stone that “music plays a vital role in the experience that someone has” in a retail or service environment, covering everything from bowling alleys to gyms, from spas to coffee shops. Having the right song or playlist can make customers spend more time in stores, and increase the chances of them spending money, recommending the location to friends, and leaving a good review on social media. Given how customers are often spoiled for choice, and make quick and first-impression judgements about a business, it is a matter of survival for businesses to appeal to the general public on every level. The choice of music (and the legal right to play that music) is much more than just background noise.
What About YouTube?
YouTube presents a new set of questions and challenges. While the content on Spotify, Apple Music, Pandora, or Amazon is uploaded directly by the music publishers, anyone with an internet account can create a YouTube profile and upload licensed music to that profile, and anyone else can stream music off that account.
Can you still play music off an unofficial YouTube channel? According to YouTube’s terms of service, the people who upload licensed music without official permission from the copyright holder are in violation of their user agreement, which specifically forbids them from “transmitting, broadcasting [and] displaying” any content that is licensed by another party. To that end, YouTube is no different than a television and a radio station, subject to the same restrictions and regulations regarding the transmission of licensed materials.
Regardless of the unofficial nature of the YouTube channel itself (or the misguided “No copyright infringement intended” disclaimers that users include with their videos), the music it is playing should still be licensed.
What About SoundCloud?
Another service that is primarily driven by content provided by users is SoundCloud. The streaming services describes itself as “a platform for creators,” but still expects all users to abide by copyright laws. The site makes it clear that while users are more than welcome to upload their own music, they will need the permission of copyright owners to upload licensed music even if the user is the songwriter, but a publisher holds the right to the song itself. SoundCloud advises that “the best way to avoid copyright infringement is to ensure that you don’t use anything created by anyone else,” and this definition of “use” also covers playing music through SoundCloud for a public audience.
The rest of the language is on par with what other digital and streaming providers say about using their respective service. Users have to get a license from the copyright owner, in order to (a) upload a licensed song to their channel and (b) play the song in a non-private setting.
Business to Consumer vs. Business
In general, services like Spotify, Apple Music, Amazon, iTunes, SoundCloud, Pandora, and Last.fm are music platforms for individual consumers (business to consumer). Typically, they are free or have a reasonably flat monthly fee, and this can confuse users into thinking that they (the users) “own” the right to do whatever they want with the music they are getting. And users do have a lot of things they can do with that music; they can stream it in their car, play it at family gatherings, or listen to it at the gym or on the bus.
But playing music in a public business setting, over multiple speakers, with the intention of creating a welcoming environment for the general public to spend their time, is the function of a business-to-business arrangement, and this needs the appropriate licensing. Spotify and Pandora have the necessary deals with performing rights organizations, meaning that a business owner can simply pay an extra fee every month, to have access to literally thousands of songs to play for customers. Additionally, this also protects the business from accusations of copyright infringement.
For services that do not have deals with PROs, a license can be obtained from one or all of them, which entails paying the PRO directly. There are also streaming services that are built exclusively for business use. This achieves much the same effect: legally playing music for customers in a place of business.
- Playing Spotify Music In Your Shop, Bar or Restaurant. Sonic Effect.
- Spotify Terms and Conditions of Use. (November 2016). Spotify.
- Spotify Now Has 100m Users, But Only Twice as Many Paid Customers as Apple Music. (June 2016). 9to5Mac.
- Spotify Has Spent $10 Billion on Music Royalties Since Its Creation and It's a Big Part of Why It’s Bleeding Money. (February 2018). Business Insider.
- You Might Need a License to Play Music in Your Small Business. (September 2011). National Federation of Independent Business.
- Chapter 1: Subject Matter and Scope of Copyright. U.S. Copyright Office.
- In Our Digital World You Don’t Own Stuff, You Just License It. (April 2013). The Guardian.
- Leading-Edge Law: Don't Open Pandora at Your Business. (March 2012). Richmond Times-Dispatch.
- Pandora Partners With DMX on Legal, Personalized Streaming Music for Businesses. (November 2011). Rolling Stone.
- Top 10 Things You Need to Know About Using Copyrighted Music on YouTube. (October 2016). Tubular Insights.
- Does “No Copyright Infringement Intended” Have Any Legal Significance? (July 2014). Pixsy.
- Learn About Copyright. SoundCloud.
- Tune Up Your Marketing: Using Spotify for Your Business. (October 2012). Social Media Today.